Dovish RBI Stance, Monsoon To Resolve The Economic Slowdown

Jun 07, 2019 | 16:50 PM IST

Jun 07, 2019 | 16:50 PM IST

Our Analysis

The week started with a bunch of bad news which arrived on the last weekend. The weak GDP data for the March quarter, poor auto sales figure, disappointing Q4 earnings, and all this before the first day of this week. Market experts were too expecting bears to take control, however, the market reacted contrastingly on Monday. Rate cut hopes paved by various indicators, reduction in Brent crude prices and the most relevant factor 10-year government bond yields which traded below 7 percent shrugged off all the negativity. On the back of these factors, markets made a spiking sprint and closed above 40,000 & 12,000 for the first time.

Further, RBI turned the expectation to reality and curtailed the repo rates by 25 bps. Being an expected and factored move market turned upside down post these rate cuts and Sensex tanked by almost more than 500 points on the same day. The biggest fall of 2019 was evident to show that, market participants are now more concerned towards the growth impetus. Liquidity crisis and trimmed GDP growth projections were the drivers of these sentiments. Banking and NBFC sector was the bleeding one this time. The wounds were deepened by ICRA and CRISIL by downgrading DHFLs commercial paper. The news just pressed the panic button which destroyed the stock. DHFL took a beating of more than 25 percent this week. Even the funds having a decent exposure to DHFLs debt instrument witnessed a nasty knock in NAVs which dropped by almost 6-51 percent.

The FPI was a net buyer in 2019 which has invested around Rs.78,000 crores so far. The recent decline in US bond yields made equities attractive over fixed-income assets as it lowers the interest rates. The scenario benefited Indian markets more this time. Indian markets have seen the lowest impacts of US-China trade war escalations as compared to other markets. Moreover, the revision of overweight position from global brokerages also raised hopes.

Going ahead, The market is expecting some stimulus and higher spending from Finance Minister Nirmala Sitharamans Union Budget on July 5, which could revive demand and growth. On an immediate basis, expect the volatility owing to uncertain global cues and lack positive domestic triggers. Any correction or consolidation would not be a surprise ahead, after a dream run up the consolidation is expected to build a future path. Being an investor no need to worry about the same rather one can bet on the quality businesses from the broader market during this phase. Progress of monsoon, movement of crude oil prices and fluctuation in currency needs to monitored keenly ahead.

This Weeks Market Highlights:

Benchmark Indices:

1) On Monday, The whole day rally led Sensex and Nifty to step its new all-time high. Strong buying in the heavyweight HDFC Twins & Reliance was another key factor which sustained markets on the higher levels. The repo rate cut hope which was among the most important attraction in the market is highly beneficial for the banking and NBFC sector. On the closing, Sensex rallied 553.42 points or 1.39 percent to 40,267.62 and the Nifty 50 jumped 165.70 points or 1.39 percent to 12,088.50.

2) On Wednesday, The benchmark indices were seen trading weak throughout the day. IT was the sector which was under pressure which further followed by other sectors too. Except for infra and metal, all other sectors closed in the red zone. On the closing bell, the indices managed to close above the milestone mark at 40083.54 the Sensex, while Nifty finished at 12021.65. In the broader market, small & mid-cap had also closed with the marginal decline of 0.15 percent.

3) On Thursday, Acting on the meet outcome the Indian share market were on the selling side led by the financial & banking stock the bloodbath was seen across all sector. Sensex plunged 553.82 points or 1.38 percent to 39,529.72 and the Nifty50 dropped 177.90 points or 1.48 percent to 11,843.80. The broader market mid & small-cap has also closed with a drop of nearly 1.70 percent each.

4) On Friday, The Indian share market started on the flat note with nifty hovering around 11,850

Broader Index & Global Market:

- On the global front, This week the US market was trading in between Ups and Downs over the weaker-than-expected economic data, bet on a Federal Reserve interest rate cut after weak private sector jobs data and hopes floated that the US and Mexico would reach an agreement to avoid U.S. tariffs on Mexican goods. The Asian kept the track and acted accordingly.

- In the broader market, The Mid & Small Cap was seen strong and buying has emerged in the selected sector, The interest related sectors were on the investor radar. Going ahead, Infra, Cement, PSU bank & reality are likely to perform.

Movers & Shakers

Shares of INFO EDGE surged nearly 12 percent after the company has acquired the venture capital-backed Highorbit Careers, which owns and operates jobs site iimjobs.com, in an all-cash deal for Rs 80.82 crore.

Shares of DHFL dropped more than 26 percent in a week after ICRA, an affiliate of Moodys, and Standard & Poors local unit CRISIL on Wednesday downgraded DHFLs commercial paper to their lowest level after the lender.

Key Market Drivers

GDP grew 5.8% in the fourth quarter of FY19 against 6.6% in the preceding one and 8.1% in the year earlier.

Trade privileges to India to end on June 5: US

Unemployment rate at 6.1% in 2017-18.

Fiscal deficit lower at 3.39% in 2018-19

China raises maximum 25% punitive tariffs on $60 bn US goods

India's per-capita income rosed by 10% to Rs 10,534 a month in FY19

Manufacturing PMI rise to 52.7vs 51.8 in April.

RBI revise norms on bank exposure to large borrowers.

Repo rate & Reverse repo rate cut by 25 bps points.

Monsoon onset over Kerala on June 8: IMD

Event Watch

International:

China Industrial Production YoY

Japan Industrial Production YoY

Japan GDP SA QoQ

China CPI YoY

Japan PPI YoY

Domestic:

India CPI YoY

India Industrial Production YoY

Crude price

INR Price

Stocks To Watch

25 bps rate cut fails to excite D-Street; banks drag Sensex & Nifty.

The Indian share market opened on a cautious note ahead of RBI policy decision. The cut of 25 bps points in repo rate, however, has been factorized, But what matters more from the perspective of markets is whether the RBI will change its policy stance. Beside this, the debt market was severely hit were the NAV was down anywhere between 6-51 percent, After the agency's downgrade the rating of DHFL to default, The stock has witnessed the beating in the early trade and was down by more than 12 percent. In the opening bell, the Sensex was down by 50.85 points at 40032.69, while Nifty was down 22.70 points or 0.19% at 11999. Among the sectors, PSU banks and IT space were trading under pressure, while auto, FMCG and metal trading with marginal gains.

In the Afternoon session, the RBI Monetary policy decision was out in the public, the tone of the RBI policy was seemed dovish and highlighted the concerns on growth. As expected there was a cut of 25 bps in repo rate, But the biggest question regarding the stance was changed making it accommodative from neutral. Once again the saying "Buy on rumors, Sell on News" has stated right, acting on the meet outcome the Indian share market were on the selling side with BankNifty declining more than 1 percent. The Sensex was down by 0.67 percent at 39816, While the Nifty was at 11926. The broader market Mid&Small-Cap were also feeling the pressure down more than 0.60 percent.

In the last session of the day, the fall in the frontline indices gets extended. Led by the financial & banking stock the bloodbath was seen across all sector. Sensex plunged 553.82 points or 1.38 percent to 39,529.72 and the Nifty50 dropped 177.90 points or 1.48 percent to 11,843.80. The broader market mid & small-cap has also closed with a drop of nearly 1.70 percent each. In the near term, volatility is likely to remain high with lack of any fresh positive domestic triggers and uncertain global cues, some further correction/consolidation in the Indian markets can be seen. Market participants would continue to monitor the progress of monsoon, movement of crude oil prices and fluctuation in currency.

Top Gainers

COALINDIA by 2.96% to Rs 271.20 ,TITAN by 1.76% to Rs 1,270.00,HEROMOTOCO by 1.50% to Rs 2,793.90,NTPC by 1.30% to Rs 136.80, POWERGRID by 1.06% to Rs 195.00.

Top Losers

GAIL By -11.49% to Rs 317.10, IBULHSGFIN by -7.73% to Rs 734.90 , INDUSINDBK by -6.84% to Rs 1,526.00, YESBANK by -5.86% to Rs 143.85., SBIN by -4.57% to Rs. 336.30.

Analysis Of Top Gainer And Loser

COALINDIA is the top gainer in today's market session after the report came as the company is targeting the coal production and offtake target for the year 2019-20 is 660 MT and capital expenditure target has been set at Rs 10,000 crore.

GAIL is the top loser in today's market, after the disappointment in tariff revision for its HVJ or Hazira-Vijaipur-Jagdishpur pipeline and HVJ upgradation of network pipelines.

Key Market News

Repo rate & Reverse repo rate cut by 25 bps points.

World Bank retains India's growth rate for FY20 at 7.5%

US-China tariffs to slash global growth in 2020: IMF

Monsoon onset over Kerala on June 8: IMD

Stocks To Watch

IBREALEST is on the upside while RAYMOND is on the downside.

IBREALEST is currently quoting at Rs.132.25 up by Rs 8.70 or 7.04% from its previous closing of Rs.123.55 on the NSE. The NSE stock has touched a 52 week high of Rs.186.60 on 04-JUN-2018 & a 52 week low of Rs.63.30 on 06-FEB-2019. The stock has seen a good buying interest with heavy volumes, and likely to remain so in coming days..

RAYMOND is currently quoting at Rs.806.70 down by Rs.-44.20 or -5.19% from its previous closing of Rs.850.90 on the NSE. The NSE stock has touched a 52 week high of Rs 1,013.45 on 15-JUN-2018 & a 52 week low of Rs 593.00 on 09-OCT-2018. The stock is showing the negative divergence and will be in selling pressure in the coming days.

Sensex, Nifty Take A Breather From Record Run Ahead Of RBI Policy

The Indian share market after hitting record highs in the previous session started the day on a weak note. Sensex was down 132.09 points or 0.33% at 40135.53, and the Nifty was down 37.30 points or 0.31% at 12051.20. Among sectors, except infra and pharma, all other indices were trading lower. The IT stocks took a severe beating from the market participant today.

In the afternoon session, the Indian share market continued to trade lower, the Sensex was trading at 40,162 & Nifty at 12,048.60. The broader market was outperforming the benchmark indices the mid & small -cap were trading with gains of 0.30 percent. On the sectoral front, PSU bank, reality & Infra were trading higher, While IT & Pharma were the worst performer.

The benchmark indices were seen trading weak throughout the day. IT was the sector which was under pressure which further followed by other sectors too. Except for infra and metal, all other sectors closed in the red zone. With the data pointing towards a slowing economy with the 20-quarter slowest GDP growth of 5.8% in 4QFY19 and the headline inflation at sub-3%, it is much likely that the RBI will go for a rate cut for the third time. However, the last two rate cuts by the RBI has not produced the desired effects. In such a scenario, the question is whether the Central bank will go for a rate cut by more than 25 basis points. Considering this in today's trade many of the company which is interest rate sensitive or the debt-laden were on the buying radar of the investors just prior to the RBI Monetary policy. On the closing bell, the indices managed to close above the milestone mark at 40083.54 the Sensex, while Nifty finished at 12021.65. In the broader market, small & mid-cap had also closed with the marginal decline of 0.15 percent.

Top Gainers

YESBANK by 2.61% to Rs 153.35 ,INFRATEL by 2.29% to Rs 274.90,NTPC by 1.50% to Rs 135.10,AXISBANK by 1.38% to Rs 823.90, COALINDIA by 1.07% to Rs 263.70.

Top Losers

ZEEL By -3.70% to Rs 346.25, HEROMOTOCO by -2.86% to Rs 2,759.00, ASIANPAINT by -2.51% to Rs 1,422.65, DRREDDY by -2.43% to Rs 2,657.95., BPCL by -2.30% to Rs. 407.50.

Analysis Of Top Gainer And Loser

YESBANK is the top gainer in today's market session after the report came that Yes Bank in talks with two PE funds to raise Rs 3,000 crore.

ZEEL is the top loser in today's market, The stock was trading weak in todays trade and was down by 3.70 percent.

Key Market News

Manufacturing PMI rise to 52.7vs 51.8 in April.

Pre-monsoon rainfall lower in 65 years, According to the statement of Skymet.

MASFIN is currently quoting at Rs.587.10 up by Rs 52.10 or 9.74% from its previous closing of Rs.535.00 on the NSE. The NSE stock has touched a 52 week high of Rs.624.60 on 07-SEP-2018 & a 52 week low of Rs. 367.95 on 23-OCT-2018. The stock has seen good buying interest with heavy volumes,The MACD divergence was also visible on the daily chart.

JUSTDIAL is currently quoting at Rs.753.70 down by Rs.-41.30 or -5.19% from its previous closing of Rs.795.00 on the NSE. The NSE stock has touched a 52 week high of Rs 819.70 on 03-JUN-2019 & a 52 week low of Rs 409.15 on 01-OCT-2018. The stock is trading in the overbought zone and most likely to trade lower in coming days.

Market fudged investor in the early trade today. With the weak global cues and Indias weak GDP data, many of the traders were expecting a correction today. However, shrugging all these factors, the hope of rate cuts, fall in Brent crude prices and government 10-year bond yield edged market higher. The Sensex rose as much as 108 points or 0.27 percent to 39,822 and Nifty 50 rose as much as 0.27 percent to 11,954.60. Among sector, FMCG was leading the gains, While, Auto was the among top loser in early trade.

In the afternoon session, the Indian share market was trading at day's high, the heavyweights HDFC Twins kept the market higher by gaining more than 1.20 percent each. The Sensex was trading at 40,011.24 & Nifty at 12,009.00. In the broader market, the Mid-cap index was also trading higher with the gains of 0.50 percent. Except for pharma, all other sectors were trading in the green.

The whole day rally led Sensex and Nifty to step its new all-time high. Strong buying in the heavyweight HDFC Twins & Reliance was another key factor which sustained markets on the higher levels. The repo rate cut hope which was among the most important attraction of todays market is highly beneficial for the banking and NBFC sector. The rate cut will reduce the borrowing costs which would aid the consumption levels. Improved consumption will ultimately result in the healthy demand scenario and reflect in the share prices of the stock. On the closing, Sensex rallied 553.42 points or 1.39 percent to 40,267.62 and the Nifty 50 jumped 165.70 points or 1.39 percent to 12,088.50. In the broader market the Mid-cap was up by 0.96 percent & Small- cap closed higher with the gain of 0.28 percent. Among sector except for Media, almost all other sector closed with the gains of 1 percent.

Top Gainers

HEROMOTOCO by 5.77% to Rs 2,835.00 ,ASIANPAINT by 3.82% to Rs 1,461.00,BAJAJ-AUTO by 3.56% to Rs 3,030.15,INDUSINDBK by 3.28% to Rs 1,658.00, IBULHSGFIN by 3.24% to Rs 812.00.

Top Losers

GAIL By -0.78% to Rs 358.20, TECHM by -0.22% to Rs 758.70, ICICIBANK by -0.20% to Rs 422.85, ULTRACEMCO by -0.11% to Rs 4,754.75., NTPC by -0.08% to Rs. 133.15.

Analysis Of Top Gainer And Loser

HEROMOTOCO is the top gainer in today's market session after the company reported a 13.5 percent rise in sales to 652,028 units in May over the previous month. The company had sold 574,366 units in April 2019

GAIL is the top loser in today's market, The stock was trading weak in todays trade and was down by 0.78 percent.

Key Market News

GDP, the economy grew 5.8% in the fourth quarter of FY19 against 6.6% in the preceding one and 8.1% in the year earlier.

RELIANCE is currently quoting at Rs.1,364.00 up by Rs 33.85 or 2.54% from its previous closing of Rs.1,330.15 on the NSE. The NSE stock has touched a 52 week high of Rs.1,417.50 on 03-MAY-2019 & a 52 week low of Rs. 914.55 on 31-May-2018. The stock is witnessing a strong buying interest in todays trade and likely to remain so in coming days.

HERITAGE FOOD is currently quoting at Rs.393.00 down by Rs.-19.30 or -4.68% from its previous closing of Rs.412.30 on the NSE. The NSE stock has touched a 52 week high of Rs 724.20 on 01-JUN-2018 & a 52 week low of Rs 387.00 on 03-JUN-2019. The stock has broken the important support level and likely to remain in a downtrend in coming days

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At Niveza India Pvt Ltd., we all come to work everyday to take the challenges of stock market head on and to change people's
perception that stock market investment is like a gamble. Over the years, we have built our profile as a company which has brought
optimum value to our subscribers through our well-researched stock recommendations. We don't promise you unrealistic returns,
we don't chase intraday or F&O dreams. We believe in the ideals of value & growth investment; these values are reflected in our
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